Hyundai’s India Strategy

Hyundai’s India Strategy

Make in India

Hyundai, one of the first global OEMs to enter the Indian passenger car market, is continuing to invest in India with a renewed focus on localized procurement. That is not all. YK Koo, the company’s MD in India, believes that India can become the global hub for compact cars.

Y K Koo, the managing director and CEO of Hyundai Motor India Limited, calls the year 2015, one of surpassed growth. Last year alone, combined with the launch of the i20 Active and Creta, the automobile player alleges to have recorded 17.3 per cent market share, with a growth of 16 per cent, as compared to the industry growth of 8.5 per cent. Moreover, its domestic sales alone have touched over four lakh, and it has managed to retain its position as the foremost exporter of passenger vehicles from India. “In the current year, we want to sustain the momentum and sell five million units in India. We believe that India has great potential and can be the global hub for compact cars. Hyundai will achieve its objective through a singular program which will enable customers to experience Hyundai across all touch points,” quotes a visibly optimistic Koo.

Having been operational in india for over two decades, hyundai’s approach in india has been both strategic and cooperative, instead of just being transactional

Although Hyundai has been manufacturing and collaborating with local suppliers for the last two decades in India, particularly on the lines of Make in India, Koo indicates that the company has invested over US $3 billion, and exports to over 90 countries from here. “It’s an ambitious program and offers great benefits to manufacturing companies who choose to embrace it,” he opines.

Delving deeper into this subject, he shares his views on how Hyundai India plans to incorporate this initiative into its business, gives suggestions on how the initiative can be strengthened further and also shares growth plans the company has in place, for the near term.

Impact of Budget 2016

In the last few months, the auto industry has seen a stagnation of demand with a growth of less than one per cent.  There was expected to be a scrappage scheme to ensure removal of old cars with low mileage and high emissions, with added expectation of incentives for the introduction of hybrid and fuel cell technology. Moreover, now, with the introduction of the one per cent cess on petrol cars and a 2.5 per cent tax on diesel cars of all capacities, along with an additional one per cent tax on luxury cars and four per cent tax on SUVs, the industry will have to pass this tax increase to the customers.  This means, new cars in India will become expensive and challenge will be to sustain the growth momentum.

Overall, while the budget is a structured approach to bring in growth and improve the customer’s sentiments, it remains a concern for the auto industry in the short term.

The Infrastructure Factor

No doubt, manufacturing and infrastructure development are critical components of economic progress, and the Government has taken several progressive and development-oriented steps towards allocating resources in farm and agriculture sectors.

That being said, there is a need to develop holistic policies which are in the long term interest of society and do not hamper the progress of the economy. In the automobile sector, we need to have a policy that regulates plying of vehicles older than 10 years on Indian roads.

Hyundai, making in India

Having been operational in India for over two decades, the company’s approach in India has been both strategic and cooperative, instead of just being transactional. With investments of over US $3 billion made in India, the manufacturing facility in Chennai produces over 6.8 lakh cars (expandable upto 7 lakh), which caters to both India and export markets.  Particularly, the rising demand for automobiles from Indian markets, like the Creta, has necessitated an increase in production of this model by 30 per cent to 10,000 units a month.

Hyundai’s supplier ecosystem too is located close to the plant, in regions such as Kancheepuram, Thiruvalluvar and more. The company assumes responsibility for helping suppliers through comprehensive partnerships and has helped them gain access to international standards and manufacturing technology, efforts which have helped Hyundai attain a high level of localisation in all of its products.

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